===============================================================================

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                    ---------


               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 1998   Commission file number 1-27


                                   TEXACO INC.
           (Exact name of the registrant as specified in its charter)


                Delaware                                    74-1383447
  (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                        Identification No.)


     2000 Westchester Avenue
     White Plains, New York                                    10650
 (Address of principal executive offices)                    (Zip Code)



        Registrant's telephone number, including area code (914) 253-4000

                                    ---------

     Texaco Inc. (1) HAS FILED all reports required to be filed by Section 13 
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 
months, and (2) HAS BEEN subject to such filing requirements for the past 90
days.

     As of October 30, 1998, there were outstanding 534,530,334 shares of 
Texaco Inc. Common Stock - par value $3.125.

===============================================================================
<PAGE>

<TABLE>
<CAPTION>
                         PART I - FINANCIAL INFORMATION

                      TEXACO INC. AND SUBSIDIARY COMPANIES
                        STATEMENT OF CONSOLIDATED INCOME
         FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
         ---------------------------------------------------------------
                     (Millions of dollars, except as noted)

                                                                                           (Unaudited)
                                                                       ---------------------------------------------------
                                                                       For the nine months            For the three months
                                                                       ended September 30,            ended September 30,
                                                                       ---------------------------------------------------
                                                                          1998           1997          1998           1997
                                                                          ----           ----          ----           ----
<S>                                                                    <C>            <C>           <C>            <C>
         REVENUES
              Sales and services                                       $23,132        $33,630       $ 7,481        $10,834
              Equity in income of affiliates, interest,
                 asset sales and other                                     766            988           226            259
                                                                       -------        -------       -------        -------
                                                                        23,898         34,618         7,707         11,093
                                                                       -------        -------       -------        -------
         DEDUCTIONS
              Purchases and other costs                                 17,922         26,324         5,836          8,355
              Operating expenses                                         1,818          2,377           593            806
              Selling, general and administrative expenses                 862          1,286           290            450
              Exploratory expenses                                         324            306            93            114
              Depreciation, depletion and amortization                   1,172          1,145           409            388
              Interest expense                                             355            309           121            106
              Taxes other than income taxes                                328            365           103             97
              Minority interest                                             43             54            13             17
                                                                       -------        -------       -------        -------

                                                                        22,824         32,166         7,458         10,333
                                                                       -------        -------       -------        -------
         Income before income taxes                                      1,074          2,452           249            760

         Provision for income taxes                                        258            411            34            270
                                                                       -------        -------       -------        -------


         NET INCOME                                                    $   816        $ 2,041       $   215        $   490
                                                                       =======        =======       =======        =======
                                                                           

         Preferred stock dividend requirements                         $   (40)       $   (42)      $   (13)       $   (14) 
                                                                       -------        -------       -------        -------

         Net income available for common stock                         $   776        $ 1,999       $   202        $   476
                                                                       =======        =======       =======        =======
                                                                       

         Per common share (dollars)
              Basic net income                                         $  1.47        $  3.85       $   .38        $   .91
              Diluted net income                                       $  1.46        $  3.75       $   .38        $   .90

              Cash dividends paid                                      $  1.35        $  1.30       $   .45        $   .45

         Average  shares outstanding for computation
              of earnings per share (thousands)
              Basic                                                    529,433        519,553       525,836        520,003
              Diluted                                                  548,575        540,040       526,382        540,193






<FN>
          See accompanying notes to consolidated financial statements.
</FN>
</TABLE>





                                      - 1 -

<PAGE>

<TABLE>
<CAPTION>


                      TEXACO INC. AND SUBSIDIARY COMPANIES
                           CONSOLIDATED BALANCE SHEET
                 AS OF SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
                 ----------------------------------------------
                              (Millions of dollars)
                                                                                       September 30,           December 31,
                                                                                           1998                    1997
                                                                                       -------------           ------------
                                                                                        (Unaudited)
                                                                                       -------------
<S>                                                                                         <C>                     <C>
ASSETS
   Current Assets
      Cash and cash equivalents                                                              $   250                $   311
      Short-term investments - at fair value                                                      35                     84
      Accounts and notes receivable, less allowance for doubtful
           accounts of  $20 million in 1998 and $22 million in 1997                            3,578                  4,230
      Inventories                                                                              1,269                  1,483
      Deferred income taxes and other current assets                                             262                    324
                                                                                             -------                -------
           Total current assets                                                                5,394                  6,432

   Investments and Advances                                                                    7,370                  5,097

   Properties, Plant and Equipment - at cost                                                  35,340                 38,956
   Less - accumulated depreciation, depletion and amortization                                20,499                 21,840
                                                                                             -------                -------
      Net properties, plant and equipment                                                     14,841                 17,116

   Deferred Charges                                                                              890                    955
                                                                                             -------                -------
           Total                                                                             $28,495                $29,600
                                                                                             =======                =======
                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY
   Current Liabilities
      Short-term debt                                                                        $   899                $   885
      Accounts payable and accrued liabilities
           Trade liabilities                                                                   2,023                  2,669
           Accrued liabilities                                                                 1,179                  1,480
      Estimated income and other taxes                                                           918                    960
                                                                                             -------                -------
           Total current liabilities                                                           5,019                  5,994

   Long-Term Debt and Capital Lease Obligations                                                6,061                  5,507
   Deferred Income Taxes                                                                       1,779                  1,825
   Employee Retirement Benefits                                                                1,209                  1,224
   Deferred Credits and Other Noncurrent Liabilities                                           1,459                  1,639
   Minority Interest in Subsidiary Companies                                                     643                    645
                                                                                             -------                -------
           Total                                                                              16,170                 16,834
                                                                                             -------                -------
   Stockholders' Equity
      Market Auction Preferred Shares                                                            300                    300
      ESOP Convertible Preferred Stock                                                           435                    457
      Unearned employee compensation and benefit plan trust                                     (369)                  (389)
      Common stock (authorized: 700,000,000 shares, $3.125 par
           value; 567,606,290 shares issued)                                                   1,774                  1,774
      Paid-in capital in excess of par value                                                   1,662                  1,688
      Retained earnings                                                                       10,057                  9,987
      Other accumulated nonowner changes in equity
         Currency translation adjustment                                                        (107)                  (105)
         Minimum pension liability adjustment                                                    (14)                   (16)
         Unrealized net gain on investments                                                       28                     26
                                                                                             -------                -------
           Total other accumulated nonowner changes in equity                                    (93)                   (95) 
                                                                                             -------                -------
                                                                                              13,766                 13,722
      Less - Common stock held in treasury, at cost                                            1,441                    956
                                                                                             -------                -------
           Total stockholders' equity                                                         12,325                 12,766
                                                                                             -------                -------
           Total                                                                             $28,495                $29,600
                                                                                             =======                =======
                                                                                         

<FN>
          See accompanying notes to consolidated financial statements.
</FN>
</TABLE>


                                       -2-

<PAGE>

<TABLE>
<CAPTION>


                      TEXACO INC. AND SUBSIDIARY COMPANIES
                 CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
              -----------------------------------------------------
                              (Millions of dollars)
                                                                                                    (Unaudited)
                                                                                              -----------------------
                                                                                                For the nine months
                                                                                                ended September 30, 
                                                                                              -----------------------
                                                                                              1998               1997
                                                                                              ----               ----
<S>                                                                                          <C>                <C>
OPERATING ACTIVITIES
   Net income                                                                                $  816             $2,041
   Reconciliation to net cash provided by (used in)
      operating activities
         Depreciation, depletion and amortization                                             1,172              1,145
         Deferred income taxes                                                                  (36)               196
         Exploratory expenses                                                                   324                306
         Minority interest in net income                                                         43                 54
         Dividends from affiliates, less than
            equity in income                                                                    (30)              (272)
         Gains on asset sales                                                                   (61)              (295)
         Changes in operating working capital                                                  (164)                15
         Other - net                                                                             14               (144)
                                                                                             ------             ------
            Net cash provided by operating activities                                         2,078              3,046

INVESTING ACTIVITIES
   Capital and exploratory expenditures                                                      (2,226)            (2,506)
   Proceeds from asset sales                                                                    130                756
   Sales (purchases) of leasehold interests                                                      25               (503)
   Purchases of investment instruments                                                         (809)              (910)
   Sales/maturities of investment instruments                                                   806                913
   Payments from affiliate for prior years' capital
      and other expenditures                                                                    612                 --
   Other - net                                                                                   --                (57)
                                                                                             ------             ------
            Net cash used in investing activities                                            (1,462)            (2,307) 

FINANCING ACTIVITIES
   Borrowings having original terms in excess
      of three months
         Proceeds                                                                             1,028                427
         Repayments                                                                            (493)              (216)
   Net increase (decrease) in other borrowings                                                  166               (156)
   Purchases of common stock                                                                   (579)               (74)
   Dividends paid to the company's stockholders
      Common                                                                                   (716)              (676)
      Preferred                                                                                 (31)               (32)
   Dividends paid to minority shareholders                                                      (45)               (64) 
                                                                                             ------             ------
            Net cash used in financing activities                                              (670)              (791)

CASH AND CASH EQUIVALENTS
   Effect of exchange rate changes                                                               (7)                (8) 
                                                                                             ------             ------
   Decrease during period                                                                       (61)               (60)
   Beginning of year                                                                            311                511
                                                                                             ------             ------
   End of period                                                                             $  250             $  451
                                                                                             ======             ======



<FN>
          See accompanying notes to consolidated financial statements.
</FN>
</TABLE>


                                       -3-
<PAGE>

<TABLE>
<CAPTION>

                      TEXACO INC. AND SUBSIDIARY COMPANIES
         CONDENSED STATEMENT OF CONSOLIDATED NONOWNER CHANGES IN EQUITY
         FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
         ---------------------------------------------------------------
                              (Millions of dollars)
                                                                                    (Unaudited)
                                                                -----------------------------------------------------
                                                                 For the nine months            For the three months
                                                                 ended September 30,             ended September 30,
                                                                ---------------------         -----------------------
                                                                1998             1997         1998               1997
                                                                ----             ----         ----               ----

   <S>                                                          <C>             <C>          <C>                <C>
   NET INCOME                                                   $  816          $2,041       $  215             $  490
   Other nonowner changes in equity (net of tax)
      Currency translation adjustment                               (2)            (37)           -                (22)
      Minimum pension liability adjustment                           2               -            -                 -
      Unrealized net gain (loss) on investments                      2               7           (5)                 8
                                                                ------          ------       ------             ------
                                                                     2             (30)          (5)               (14)
                                                                ------          ------       ------             ------
   TOTAL NONOWNER CHANGES IN EQUITY                             $  818          $2,011       $  210             $  476
                                                                ======          ======       ======             ======
                                                               
</TABLE>


                      TEXACO INC. AND SUBSIDIARY COMPANIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

Note 1. Formation of Equilon Enterprises LLC
--------------------------------------------

Effective  January  1,  1998,  Texaco and Shell Oil Company formed Equilon
Enterprises LLC (Equilon),  a Delaware limited liability company. Equilon is a
joint  venture  that  combined  major  elements  of the companies' Western and
Midwestern U.S. refining and marketing businesses and their nationwide trading,
transportation and lubricants businesses. Texaco owns 44 percent and Shell owns
56 percent of Equilon.  Further  detail concerning Equilon was included in our
Current Report on Form 8-K, filed with the Commission on January 30, 1998.

We are  accounting  for our interest in Equilon using the equity  method. Under
this method,  we  reclassified  the net amount of assets and liabilities of the
businesses   contributed  to  Equilon  to   Investments   and  Advances  in the
Consolidated  Balance  Sheet.  We  record  our  share of  Equilon's  results of
operations  on a  one-line  basis to  Equity  in  Income  of  Affiliates in the
Consolidated Statement of Income.  We record the provision for income taxes and
related   liability   applicable  to  our  share  of  Equilon's  income  in our
consolidated financial statements, since Equilon is a limited liability 
company. Additionally,  we now record transactions  between Texaco and Equilon
as outside third-party transactions. This change to the equity method of 
accounting results in  significant variances  between the 1998 and 1997 periods
in the  individual line captions appearing in the financial statements.

The carrying amounts at January 1, 1998, of the principal assets and 
liabilities of the  businesses  we  contributed  to Equilon  were $.2 billion
of net working capital  assets,  $2.8 billion of net  properties,  plant and 
equipment and $.2 billion of debt.

In  April,   1998,  we  received   $463  million  from  Equilon,  representing
reimbursement of certain capital expenditures incurred prior to the formation
of the joint  venture.  In July 1998,  we received  $149  million  from Equilon 
for certain specifically identified assets transferred for value to Equilon.

Summarized  unaudited financial  information for Equilon, for the nine and 
three month  periods ended  September  30, 1998, is presented  below on a 100% 
Equilon basis (in millions of dollars):

<TABLE>
<CAPTION>


                                                                    For the nine months            For the three months
                                                                 ended September 30, 1998        ended September 30, 1998
                                                                 ------------------------        ------------------------
<S>                                                                      <C>                              <C>

                  Gross revenues                                         $18,195                          $6,100
                  Income before income taxes                             $   542                          $  232


</TABLE>

                                      - 4 -
<PAGE>

Note 2. Formation of Motiva Enterprises LLC
-------------------------------------------

Effective July 1, 1998, Texaco, Shell Oil Company and Saudi Aramco formed 
Motiva Enterprises LLC (Motiva),  a Delaware  limited  liability  company.  
Motiva is a joint  venture that  combined  Texaco's and Saudi  Aramco's 
interests and major elements  of  Shell's  Eastern  and  Gulf  Coast  U.S. 
refining  and  marketing businesses.  Texaco's  and Saudi  Aramco's  interest 
in these  businesses  were previously  conducted by Star Enterprise  (Star), 
a  joint-venture  partnership owned 50 percent by Texaco and 50 percent by 
Saudi  Refining,  Inc., a corporate affiliate  of Saudi  Aramco.  Texaco and
Saudi  Refining,  Inc.,  each owns 32.5 percent and Shell owns 35 percent of 
Motiva.  Further detail  concerning  Motiva was included in our Current  
Report on Form 8-K,  filed with the  Commission  on July 1, 1998.

Beginning  July 1, 1998, we are  accounting for our interest in Motiva using 
the equity  method.  Previously,  our interest in Star was also accounted for 
on the equity method of accounting.  Accordingly, our investment in Motiva 
approximates our previous  investment  in Star.  We record the provision for 
income taxes and related liability applicable to our share of Motiva's income
in our consolidated financial statements, since Motiva is a limited liability
company.

Gross  revenues  and income  before  income  taxes for the first three months
of Motiva's  operations  (July 1,  1998  through  September  30,  1998),  on a 
100% unaudited basis, were $2,877 million and $59 million, respectively.

Note 3. Inventories
-------------------

The inventory accounts of Texaco Inc. and consolidated subsidiary companies 
are presented below (in millions of dollars):

<TABLE>
<CAPTION>
                                                                                                 As of
                                                                               ---------------------------------------
                                                                               September 30,              December 31,
                                                                                   1998                       1997
                                                                               ------------               ------------
                                                                                (Unaudited)

<S>                                                                               <C>                       <C>
     Crude oil                                                                    $  216                    $  308
     Petroleum products and petrochemicals                                           828                       893
     Other merchandise                                                                35                        59
     Materials and supplies                                                          190                       223
                                                                                  ------                    ------
          Total                                                                   $1,269                    $1,483
                                                                                  ======                    ======

</TABLE>

Note 4. Contingent Liabilities
------------------------------

Information  relative to commitments and contingent liabilities of Texaco Inc.
and  subsidiary companies is presented in Notes 16 and 18, pages 57-58 and 61,
respectively, of Texaco Inc.'s 1997 Annual Report to Stockholders.

                               -------------------

In the company's opinion, while it is impossible to ascertain the ultimate 
legal and financial liability with respect to contingent  liabilities and 
commitments, the aggregate  amount of such  liability in excess of financial 
reserves is not anticipated to be materially important in relation to the 
consolidated financial position or results of operations of Texaco.








                                      - 5 -

<PAGE>

Note 5. Caltex Group of Companies
---------------------------------


Summarized  unaudited  financial  information for the Caltex Group of Companies,
owned 50% by Texaco and 50% by Chevron Corporation, is presented below on a 100%
Caltex Group basis (in millions of dollars):

<TABLE>
<CAPTION>
                                                                       For the nine months      For the three months
                                                                       ended September 30,       ended September 30, 
                                                                       -------------------      --------------------
                                                                         1998       1997           1998       1997
                                                                         ----       ----           ----       ----
<S>                                                                   <C>        <C>             <C>        <C>
                  Gross revenues                                      $12,407    $13,217         $3,852     $4,090

                  Income before income taxes                          $   606    $   859         $   17     $  220

                  Net income (loss)                                   $   367    $   556         $  (59)    $  170

</TABLE>







                              * * * * * * * * * * *




In the determination of preliminary and unaudited financial statements for the 
nine-month and three-month periods ended  September 30, 1998 and 1997,  our 
accounting  policies have been applied on a basis  consistent  with the 
application  of such  policies  in our financial statements issued in our 1997 
Annual Report to Stockholders.  In our opinion,  we have made all  adjustments
and  disclosures  necessary  to present fairly our results of operations  for
such periods.  These  adjustments  include normal  recurring  adjustments.  The
information is subject to year-end audit by independent public  accountants. 
We make no forecasts or  representations  with respect to the level of net 
income for the year 1998.



                              * * * * * * * * * * *



                      SUPPLEMENTAL MARKET RISK DISCLOSURES
                      ------------------------------------

Information  relative to Texaco's  market risk sensitive instruments by major
category  at December  31, 1997 is  presented in the Supplemental Market Risk
Disclosures  on  pages  69  and  70 of  Texaco  Inc.'s 1997 Annual Report  to
Stockholders.

Texaco's  forward  exchange  contracts  outstanding at September  30,  1998 of
approximately $2,172 million net buy contracts increased by $933 million from
the $1,239 million outstanding at December 31, 1997. This increase  principally
resulted from the hedging of increased exposures to foreign currency 
denominated net monetary assets and liabilities and from the hedging of
increased  exposures related to foreign currency  denominated  capital
projects.  As of September 30, 1998, a  hypothetical  10% change in currency 
exchange  rates would generate an increase or decrease in fair value of 
approximately  $217 million,  compared to $124 million at December 31, 1997.
This would be offset by an opposite effect on the related hedged exposures.





                                      - 6 -

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------



RESULTS OF OPERATIONS
---------------------

Our net income  for the third  quarter of 1998 was $215  million, or $0.38 per
share, as compared with $490 million, or $0.90 per share, for the third quarter
of 1997. Net income for the first nine months of 1998 was $816 million, or 
$1.46 per share,  as compared with $2,041 million,  or $3.75 per share,  for 
the first nine months of 1997.

Net income before special items for the third quarter of 1998 was $208 million,
or $0.37 per share. There were no special items in the third quarter of 1997.
For the first nine months of 1998, net income  before  special  items was $802
million,  or $1.43 per share,  as  compared  with $1,422 million, or $2.60 per
share, for the first nine months of 1997.

Weak worldwide crude oil and natural gas prices and depressed downstream
margins in the Far East eroded third quarter  earnings.  Worldwide  production
growth of nine  percent  and tight  control  over  cash  expenses  helped to 
lessen  these negative impacts.

During the third quarter of 1998:
          o Average quarterly crude oil prices  slumped to their lowest levels
            since 1986; 
          o Continued economic instability in the Far East depressed
            downstream margins; 
          o Worldwide daily production rose nine percent for
            the quarter and 12 percent for nine months;  and 
          o Year-to-date cash operating expenses per barrel decreased six 
            percent.

Average  crude oil  prices  for the quarter reached a low point not seen since
mid-1986. OPEC efforts to reduce production and lower inventory  levels caused
crude prices to rebound somewhat from their summer lows; however, prices have
recently retreated and remain significantly below last year's levels.  Storms
in the Gulf of Mexico caused temporary  production  shut-ins which further
dampened earnings.

Our worldwide downstream results decreased from sluggish margins, especially in
the Far East, due to the impact of the Asian financial and economic crisis. As
a result,  Singapore  refinery  margins  were  negative in the third  quarter 
from extremely weak demand.  In the U.S.,  results were down from an extremely
strong quarter  last year;  however,  in Latin  America and  Europe,  margins 
and sales volumes remained strong.

To remain competitive in this environment,  our affiliate,  Caltex,  announced a
reorganization  program.  This program will focus the organization  functionally
and  better  position  Caltex  to  identify  growth  opportunities.  When  fully
implemented,  it is expected to yield  expense  savings in excess of $50 million
annually.  Also, our U.S.  alliances with Shell Oil Company and Saudi  Refining,
Inc.  continue  to  implement  programs  that will take  advantage  of  existing
synergies.

Results for 1998 and 1997 are  summarized  in the following table. Details on
special items are included in the functional analysis which follows this table.

<TABLE>
<CAPTION>

                                                                                            (Unaudited)
                                                                         -------------------------------------------------
                                                                         For the nine months          For the three months
                                                                         ended September 30,           ended September 30, 
                                                                         -------------------          --------------------

                                                                         1998           1997          1998           1997
                                                                         ----           ----          ----           ----
                                                                                       (Millions of Dollars)
<S>                                                                     <C>            <C>           <C>             <C>
Net income before special items                                         $  802         $1,422        $  208          $ 490
                                                                        ------         ------        ------          -----
Caltex reorganization                                                      (43)             -           (43)             -
U.S. alliance formation issues                                              (7)             -            25              -
U.S. tax issues                                                             25            488            25              -
Gains on major asset sales                                                  20            174             -              -
Tax benefits on asset sales                                                 19              -             -              -
Financial reserves for various issues                                        -            (43)            -              -
                                                                        ------         ------        ------          -----
                                                                            14            619             7              -
                                                                        ------         ------        ------          -----
Total net income                                                        $  816         $2,041        $  215          $ 490
                                                                        ======         ======        ======          =====
                                                                       
</TABLE>

                                      - 7 -

<PAGE>

                               OPERATING EARNINGS


PETROLEUM AND NATURAL GAS
     EXPLORATION AND PRODUCTION
        United States

Exploration and production earnings in the U.S. for the third quarter of 1998
were $92 million, as compared with $232 million for the third quarter of 1997.
For the first nine months of 1998 and 1997, earnings were $319 million and $732
million, respectively. Results for 1998 included a second quarter special gain
of $20 million from the sale of an interest in a natural gas pipeline. 
Excluding the  special  gain,  results  for the first  nine  months of 1998 
totaled  $299 million.  Results  for 1997  included  a second  quarter special
charge of $43 million to establish  financial  reserves for royalty and  
severance tax issues.  Excluding the special charge,  results for the first
nine months of 1997 totaled $775 million.

U.S. exploration and production earnings for the third quarter and nine months
of 1998 were below last year's levels due to lower crude oil and  natural gas
prices.  Average realized crude oil prices for the third quarter and nine 
months of 1998 were  $10.06 and  $10.87 per  barrel;  39  percent  lower than 
the 1997 periods.  The dramatic  price  declines  reflect a slowing in  
worldwide  demand growth and continued high inventory levels.  Crude oil 
prices recovered somewhat in late  September as a result of the OPEC nations'
efforts to cut  production. For the third quarter and nine months of 1998, 
average  natural gas prices were $1.89 and $2.03 per MCF; 11 percent lower 
than the 1997  periods.  Lower natural gas prices were the result of excess 
supply in the marketplace.

Production increased four percent for this year's third quarter and nine 
percent for the year.  The increased  production in the quarter  included new 
production from the Arnold,  Oyster and Barite South fields  located in the
Gulf of Mexico. Both  production and earnings were  negatively  impacted by 
the recent storms in the Gulf of Mexico.  This year included  production from 
the Monterey properties acquired in November 1997.

We continued to pursue new reserve opportunities in the Gulf of Mexico, 
leading to higher  exploration  expenses  this year.  Exploration  expenses 
for the nine months of 1998 were $195 million  before tax,  $73 million 
higher than the same period of 1997.  For the third  quarter of 1998,  
exploration  expenses were $48 million, $2 million higher than the third 
quarter of 1997.

         International

Exploration and production earnings outside the U.S. for the third quarter of
1998 were $40 million, as compared with $103 million for the third  quarter of
1997. For the first nine months of 1998 and 1997, earnings were $131 million
and $499 million,  respectively.  Results for 1997 included  second quarter
special gains of $161  million  from the sales of a 15 percent  interest in 
the Captain Field in the U.K.  North Sea,  an interest in  Canadian  gas  
properties  and an interest in an Australian pipeline system.  Excluding the
special gains, results for the first nine months of 1997 totaled $338 million.

International exploration and production earnings for the third quarter and 
nine months of 1998 declined significantly from the same periods of 1997 due
to lower crude oil  prices.  Average  realized  crude oil prices in 1998 were
$11.05 per barrel for the quarter and $11.55 for nine months.  These average 
prices were 35 percent  below  1997  levels.  OPEC's  efforts  to reduce
production  and lower inventory  levels  caused  prices to recover  slightly
from their  summer lows; however,  prices have  recently  retreated and remain
substantially  below last year's levels.

Daily  production  growth of 15 percent  for this  year's  third  quarter and 
16 percent  for the year  benefited  earnings.  The  combined  production from 
the Captain,  Erskine  and Galley  fields in the U.K.  North Sea grew to 95
thousand barrels of oil equivalent per day in the third quarter.  Production
also grew in the Partitioned Neutral Zone, Indonesia and Colombia.



                                      - 8 -

<PAGE>

Exploration  and  production  operating results outside the U.S. for the third
quarter and nine months of 1998 included non-cash currency charges of 
$3 million and $6 million,  respectively,  related to deferred income taxes 
denominated in British Pound  Sterling.  This compares to benefits of $13
million for the third quarter and $26 million for nine months of 1997.


     MANUFACTURING, MARKETING AND DISTRIBUTION

         United States

Manufacturing,  marketing  and  distribution  earnings in the U.S. for the 
third quarter of 1998 were $124  million,  as compared with $132 million for 
the third quarter of 1997. For the first nine months of 1998 and 1997,  
earnings were $235 million  and $238  million,  respectively.  Results  for 
1998  included  a third quarter net special  gain of $25 million  associated 
with the  formation of the U.S.  alliances.  This net gain included gains on
asset sales,  asset writedowns and other  formation  charges.  The second
quarter  of 1998  included a special charge of $32  million  for  alliance  
formation  expenses,  primarily  employee severance programs. Excluding these
special items, results for the third quarter and  first  nine  months  of  1998 
totaled  $99  million  and  $242   million, respectively.  Results for 1997 
included a second  quarter  special gain of $13 million from the sale of credit
card  operations.  Excluding  the special  gain, results for the first nine
months of 1997 totaled $225 million.

U.S. manufacturing, marketing and distribution earnings for the third quarter
of 1998 included  results from Motiva  Enterprises  LLC, our Eastern  alliance
with Shell Oil Company and Saudi Refining,  Inc.,  that began  operations in 
July. In addition,   the  quarter  and  year  included  operating  results  
from  Equilon Enterprises  LLC,  our  Western  alliance  with  Shell Oil 
Company,  that began operations in the first quarter.

Results for the third quarter of 1998  reflected the industry trend of 
shrinking refining margins. Operating difficulties at certain refineries and 
the temporary shutdown  of  Gulf  Coast  refineries  in  September  due to 
hurricane  Georges negatively impacted earnings. Lower crude costs as well as 
strong transportation and lubricants earnings benefited the quarter and year.

Results for the third quarter of 1997  included  minimum  refinery  downtime
and solid West Coast margins.  Both the quarter and year included  strong Gulf
Coast refining margins. However, refinery fires in late 1996 and early 1997
negatively affected  product yields and caused  casualty loss expense in the
first quarter. Additionally, West Coast margins were weak during the first
half of the year due to intense competitive pressures.

         International

Manufacturing,  marketing  and  distribution  earnings  outside the U.S. for
the third  quarter of 1998 were $38 million,  as compared  with $134 million 
for the third quarter of 1997. For the first nine months of 1998 and 1997, 
earnings were $414 million and $370 million,  respectively.  Results for 1998 
included a third quarter net special charge of $43 million for a  
reorganization  program in our affiliate,  Caltex.  Excluding the special 
charge, results for the third quarter and  first  nine  months  of  1998  
totaled  $81  million  and  $457   million, respectively.

International manufacturing and marketing earnings for the third quarter of 
1998 declined  significantly  from  1997.  The  sharp  decline  was due to the 
Asian financial  and  economic  crisis  which  weakened  demand and  created
currency volatility.  Caltex  experienced  a  loss  as  a  result  of  
declining  margins throughout  the region from weak inland demand that caused
higher  volumes to be sold into the lower  margin  export  markets.  Singapore
refinery  margins were negative from extremely weak demand. However, in Latin
America and Europe, third quarter earnings were up slightly.

Nine months 1998 results increased due to improved manufacturing and marketing
results  from higher  margins and  volumes, mainly in the U.K., Caribbean and
Central America.



                                      - 9 -

<PAGE>

Manufacturing, marketing and distribution operating results outside the U.S. 
for the third quarter and nine months of 1998 included  non-cash currency 
charges of $3 million  and $5  million,  respectively,  related to  deferred
income  taxes denominated in British Pound  Sterling.  This compares to 
benefits of $4 million for the third quarter and $8 million for nine months of
1997.


NONPETROLEUM

Nonpetroleum earnings for the third quarter of 1998 were $4 million, as 
compared with $3 million for the third quarter of 1997. For the first nine 
months of 1998 and 1997, earnings were $4 million and $16 million, 
respectively.


                         CORPORATE/NONOPERATING RESULTS

Corporate  and  nonoperating charges for the  third  quarter  of 1998 were $83
million, as compared with charges of $114 million for the third quarter of 
1997. Corporate and  nonoperating  charges for the first nine months of 1998 
were $287 million,  as compared with earnings of $186 million for the first 
nine months of 1997.  Results for 1998 included a third quarter  special 
benefit of $25 million to adjust prior year's tax liability and a second 
quarter special tax benefit of $19 million  attributable to the sale of an 
interest in a subsidiary.  Excluding the special  benefits,  charges  for the
third  quarter and first nine months of 1998 totaled $108 million and $331 
million, respectively.  Results for the first nine months of 1997  included a 
first  quarter  special  benefit of $488 million associated  with  an IRS 
settlement.  Excluding  this  benefit,  corporate  and nonoperating charges 
totaled $302 million for the first nine months of 1997.

Corporate and nonoperating results for the third quarter and nine months of 
1998 included  increased  net  interest  expense  from higher debt  levels; 
however, successful  efforts  to  control  expenses  in  overhead  departments
more than mitigated this impact.  Results for nine months of 1998 included 
higher expenses for Texaco's  corporate  advertising  campaign  introduced in
the second half of 1997.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Our cash,  cash  equivalents  and  short-term  investments  were $285 million 
at September 30, 1998, as compared with $395 million at year-end 1997.

During  1998,  our  operations  provided  cash of $2,078  million.  We raised 
an additional  $701 million from net  borrowings and $130 million from asset 
sales. We spent  $2,226  million on our capital and  exploratory  program and 
paid $792 million in dividends to common, preferred and minority shareholders.

At September 30, 1998, our ratio of debt to total borrowed and invested  
capital was 34.9%,  as compared with 32.3% at year-end  1997. At September 30, 
1998, our long-term  debt  included  $1.7 billion of debt  scheduled to mature
within one year,  which we have both the intent and  ability to  refinance  on 
a  long-term basis.  At September 30, 1998, we  maintained  $1.7 billion in 
revolving  credit facilities,  which were unused at quarter end. On 
November 9, 1998, we increased the amount of the commitments to $2.05 billion,
which also remained unused.

Our major debt activity during the first nine months of 1998 was as follows. We:
o  borrowed $300 million at 6% for seven years and issued $153 million of 
   Medium-Term Notes.
o  borrowed $150 million at 5.92% for seven years to cover expenditures at our 
   Erskine field in the U.K. North Sea.
o  borrowed $131 million for four years and entered into an associated 
   LIBOR-based floating rate swap associated with existing assets of our Tartan
   Field in the U.K. North Sea.
o  borrowed $94 million from the issuance of Zero Coupon Notes due 2005.



                                     - 10 -

<PAGE>

o increased the amount of our  commercial  paper by $300 million,  to a total of
  $1.2 billion at September 30, 1998. 
o repurchased  approximately $200 million of 10.61% Notes that we assumed in
  last year's acquisition of Monterey Resources.

During the first  quarter of 1998,  we  purchased  about $125  million of common
stock in the open  market.  This  completed  a two-year  program  under which we
purchased $650 million of our common stock. On March 30, 1998, we announced that
we will purchase up to an additional $1 billion of our common stock,  subject to
market  conditions,  through  open  market  purchases  or  privately  negotiated
transactions.  Under the current program, we purchased about $450 million during
the first nine months of 1998.

In  April  1998,   we  received   $463  million  from   Equilon,   representing
reimbursement of certain capital expenditures incurred prior to the formation of
Equilon.  In  addition,  we received  $149 million from Equilon in July 1998 for
certain specifically identified assets transferred for value to Equilon.

We  consider  our  financial  position  to be  sufficiently  strong  to meet our
anticipated future financial requirements.


NEW ACCOUNTING STANDARDS
------------------------

In June 1997, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) 131,  "Disclosures about Segments of an
Enterprise  and  Related   Information."   SFAS  131  requires  that  we  report
information  about our business  segments on the same basis used internally when
assessing performance and allocating  resources.  We will adopt SFAS 131 for our
1998  audited  financial  statements.  Presently,  we  disclose  in our  audited
financial statements  information about geographic segments only. We expect that
our  business  segments  will be  substantially  similar  to those we  presently
identify in the  Management's  Discussion and Analysis section of our Forms 10-K
and 10-Q.

In February 1998, the FASB issued SFAS 132, "Employers' Disclosure about Pension
and Other  Postretirement  Benefits."  We are required to adopt SFAS 132 for our
1998 audited financial  statements and will modify our disclosures  accordingly.
SFAS  132  does  not  affect  how  we  measure  expense  for  pension  or  other
postretirement benefits.

In June 1998, the FASB issued SFAS 133,  "Accounting for Derivative  Instruments
and  Hedging  Activities,"  effective  in  the  first  quarter  2000.  SFAS  133
establishes  new  accounting  rules and disclosure  requirements  for derivative
instruments.  We are  assessing the impacts of SFAS 133 on the balance sheet and
on net income.


CAPITAL AND EXPLORATORY EXPENDITURES
------------------------------------

Our capital and exploratory  expenditures  for the first nine months of 1998 and
1997 were $2,769 million and $3,023 million, respectively.

In the U.S., our  exploration  and  development  expenditures  slowed during the
third quarter,  but were flat for the year.  Activities continued to reflect our
focus in both the  traditional  shelf and deepwater areas of the Gulf of Mexico.
Using  advanced  technologies,  we continue to grow oil and gas  production  and
reserves.

Internationally,  our expenditures decreased following the completion of several
large projects in both the U.K. and Danish sectors of the North Sea. Development
activity in Indonesia,  the North Sea and other  promising areas continued while
exploratory  spending  decreased in China and other Far Eastern areas.  Upstream
expenditures  in discovered  reserve  opportunities  also continued in promising
areas, including the Karachaganak venture in Kazakhstan.




                                     - 11 -

<PAGE>

Lower international  downstream  expenditures reflected a decrease in the Caltex
marketing  areas from higher 1997 service  station  investments in Hong Kong and
slower  re-imaging  spending in Caltex areas and Europe.  These  decreases  were
partly offset by higher  marketing and  manufacturing  expenditures in our newly
formed U.S. alliances.

We  continue  to  carefully  assess  investment  projects  given the current and
projected  industry  environment.  Adjustments  in  spending  have  been made by
deferring  non-critical  projects into future  periods.  It is expected that our
capital and exploratory  expenditures for the year 1998 will be about 20 percent
less than the $4.6 billion that we had budgeted for the year.

YEAR 2000
---------

The Year  2000  ("Y2K")  problem  concerns  the  inability  of  information  and
technology-based   operating   systems  to   properly   recognize   and  process
date-sensitive  information  beyond  December  31,  1999.  This could  result in
systems failures and  miscalculations,  which could cause business  disruptions.
Equipment that uses a date, such as computers and operating control systems, may
be affected.  This includes  equipment used by our customers and  suppliers,  as
well as by utilities and governmental entities that provide critical services to
us.

At Texaco,  we started  working on the Y2K problem in early 1995. By early 1996,
we formed a Business Unit Steering  Team and a Corporate  Year 2000 Office.  Our
progress  is  reported  monthly  to the  CEO,  and  quarterly  to the  Board  of
Directors.  Additionally,  we are actively  performing  both internal audits and
external reviews to ensure that we reach our objectives. We project that we will
spend no more than $75 million on making our systems Y2K ready.  As of September
30, 1998, we have incurred costs of approximately $35 million.

We recognize that the Y2K issue affects every aspect of our business,  including
computer  software,  computer  hardware,   telecommunications,   and  industrial
automation.  Our Y2K effort has  included  an  extensive  program to educate our
employees,  and  development  of detailed  guidelines  for  project  management,
testing,  and  remediation.  Each business unit is periodically  graded on their
progress  toward  reaching their project  milestones.  Our major  affiliates are
undertaking similar programs.

In our  computers  and  computer  software,  most of the  problems we have found
involve our corporate  financial  software  applications.  Approximately  95% of
these need some type of  modification or upgrade.  In our industrial  automation
systems, which are used in our refinery, lubricant plant, gas plant and oil well
operations to monitor,  control and log data about the processes,  approximately
5% need  modification or upgrade.  The majority of these are auxiliary  systems,
such as laboratory  analyzers and alarm  logging  functions,  but several of the
higher level supervisory data acquisition systems and flow metering systems also
require  upgrades.  We project  that we will be  approximately  80%  through the
effort of  inventorying,  assessing  and fixing our  systems by the end of 1998.
Almost all systems  should be ready by the end of the first quarter of 1999, but
a few will be delayed until later in 1999 as we wait for vendor upgrades.

We are well into our program to  identify  and assess the Y2K  readiness  of our
critical and important suppliers and customers.  We will either seek alternative
suppliers  and  customers  for those we assess as risky,  or we will develop and
test  contingency  plans. We have begun to develop these  contingency  plans. In
addition,  we are reviewing our existing business resumption plans. We expect to
arrange alternative suppliers or develop and complete the testing of contingency
plans no later than July 1, 1999.

All  of our  production  and  automation  systems  are  routinely  analyzed  for
potential failures and appropriate  responses are identified and documented.  If
we have missed a potential Y2K problem,  it will most likely be in our financial
software,  or in  auxiliary  systems  in  our  operations,  such  as  laboratory
analyzers and alarm logging  functions,  where we have found the majority of the
problems.  We do not  anticipate  that a  problem  in these  areas  will  have a
significant impact on our ability to pursue our primary business objectives. Any
problems in our primary  industrial  automation  systems can be dealt with using
our existing  engineering  procedures.  While there can be no assurance that all
such modifications and plans will be successful, including contingency plans for
our major suppliers and customers,  we do not expect that any  disruptions  will
have a material adverse effect on our overall  financial  position or results of
operations.
                                     - 12 -

<PAGE>

EURO
----

On January 1, 1999, eleven of the fifteen member countries of the European Union
are  scheduled  to establish  fixed  conversion  rates  between  their  existing
currencies  ("legacy  currencies")  and one common currency - the euro. The euro
will begin to be traded on world currency  exchanges and may be used in business
transactions.  On January 1, 2002, new euro-denominated  bills and coins will be
issued,  and legacy currencies will be completely  withdrawn from circulation by
June 30 of that year.

Our operating  subsidiaries  affected by the euro  conversion have been actively
addressing  our IT systems  and overall  fiscal and  operational  activities  to
ensure our euro readiness. We are adapting our computer, financial and operating
systems and equipment to accommodate euro-denominated  transactions. We are also
reviewing our marketing and  operational  policies and  procedures to ensure our
ability to continue to successfully  conduct all aspects of our business in this
new, price transparent market. We believe that the euro conversion will not have
a material adverse impact on our financial condition or results of operations.


WORLDWIDE UPSTREAM REORGANIZATION
---------------------------------

On November 12, 1998, we announced a worldwide upstream  reorganization designed
to place greater emphasis on our long-term production and reserve growth, and to
address the need for  streamlining  costs and improving  competitiveness  in the
current low oil price  environment.  The reorganization is expected to result in
the reduction of approximately 1,000 employees and contractors  worldwide and to
be completed by the end of the first quarter of next year.


                                  * * * * * * *



FORWARD-LOOKING STATEMENTS
--------------------------

Portions  of the  foregoing  discussion  of YEAR  2000,  the EURO and  WORLDWIDE
UPSTREAM REORGANIZATION contain "forward-looking  statements" within the meaning
of Section 27A of the  Securities  Act of 1933 and Section 21E of the Securities
Exchange Act of 1934.  These  statements are based on our current  expectations,
estimates  and  projections.  Therefore,  they  could  ultimately  prove  to  be
inaccurate.  Factors  which could affect our ability to be Y2K  compliant by the
end of 1999 include: the failure of customers, suppliers,  governmental entities
and others to achieve  compliance and the inaccuracy of certifications  received
from them;  our inability to identify and remediate  every possible  problem;  a
shortage  of  necessary  programmers,   hardware  and  software;   and,  similar
circumstances.  Factors  which  could  alter  the  financial  impact of our euro
conversion   include   changes  in   current   governmental   regulations   (and
interpretations of such regulations),  unanticipated  implementation  costs, and
the effect of the euro conversion on product prices and margins.  The extent and
timing of the upstream  reorganization  will depend upon  worldwide and industry
economic conditions.


                           PART II - OTHER INFORMATION


Item 1. Legal Proceedings
-------------------------

Reference is made to the  discussion of Contingent  Liabilities in Note 4 to the
Consolidated  Financial  Statements  of this Form 10-Q,  Item 1 of Texaco Inc.'s
Forms 10-Q for the quarterly  periods ended March 31, 1998 and June 30, 1998 and
to  Item 3 of  Texaco  Inc.'s  1997  Annual  Report  on  Form  10-K,  which  are
incorporated herein by reference.













                                     - 13 -

<PAGE>

<TABLE>
<CAPTION>

Item 5. Other Information
-------------------------
                                                                                             (Unaudited)
                                                                         -------------------------------------------------
                                                                         For the nine months          For the three months
                                                                         ended September 30,           ended September 30,
                                                                         -------------------           -------------------
                                                                          1998          1997           1998           1997
                                                                          ----          ----           ----           ----
                                                                                        (Millions of dollars)
<S>                                                                     <C>            <C>           <C>            <C>
FUNCTIONAL NET INCOME
---------------------
Operating earnings
   Petroleum and natural gas
      Exploration and production
         United States                                                  $  319         $  732        $   92         $  232
         International                                                     131            499            40            103
                                                                        ------         ------        ------         ------
           Total                                                           450          1,231           132            335
                                                                        ------         ------        ------         ------
      Manufacturing, marketing and distribution
         United States                                                     235            238           124            132
         International                                                     414            370            38            134
                                                                        ------         ------        ------         ------
           Total                                                           649            608           162            266
                                                                        ------         ------        ------         ------

           Total petroleum and natural gas                               1,099          1,839           294            601

   Nonpetroleum                                                              4             16             4              3
                                                                        ------         ------        ------         ------
           Total operating earnings                                      1,103          1,855           298            604

Corporate/Nonoperating                                                    (287)           186           (83)          (114)
                                                                        ------         ------        ------         ------

           Total net income                                             $  816         $2,041        $  215         $  490
                                                                        ======         ======        ======         ======


CAPITAL AND EXPLORATORY EXPENDITURES
------------------------------------
   Exploration and production
         United States                                                  $1,251         $1,272        $  352         $  491
         International                                                     834            990           283            444
                                                                        ------         ------        ------         ------
           Total                                                         2,085          2,262           635            935
                                                                        ------         ------        ------         ------
   Manufacturing, marketing and distribution
         United States                                                     303            246           120             94
         International                                                     358            486           130            178
                                                                        ------         ------        ------         ------
           Total                                                           661            732           250            272
                                                                        ------         ------        ------         ------

   Other                                                                    23             29             3             18
                                                                        ------         ------        ------         ------
           Total                                                        $2,769         $3,023        $  888         $1,225
                                                                        ======         ======        ======         ======

   Exploratory expenses included above:
         United States                                                  $  195         $  122        $   48         $   46
         International                                                     129            184            45             68
                                                                        ------         ------        ------         ------
           Total                                                        $  324         $  306        $   93         $  114
                                                                        ======         ======        ======         ======








</TABLE>






                                     - 14 -

<PAGE>

<TABLE>
<CAPTION>

                                                                                             (Unaudited)
                                                                         -------------------------------------------------
                                                                         For the nine months          For the three months
                                                                         ended September 30,           ended September 30,
                                                                         -------------------           -------------------
                                                                         1998            1997         1998            1997
                                                                         ----            ----         ----            ----
OPERATING DATA
--------------

Exploration and Production
--------------------------

<S>                                                                     <C>            <C>           <C>            <C>
United States
-------------
     Net production of crude oil and natural
         gas liquids (000 BPD)                                             443            387           432            391
     Net production of natural gas - available
         for sale (000 MCFPD)                                            1,694          1,686         1,641          1,722
     Total net production (000 BOEPD)                                      726            668           706            678

     Natural  gas sales (000 MCFPD)                                      3,926          3,570         3,963          3,312

     Average U.S. crude (per bbl)                                       $10.87         $17.71        $10.06         $16.56
     Average U.S. natural gas (per mcf)                                 $ 2.03         $ 2.28        $ 1.89         $ 2.13
     Average WTI (Spot) (per bbl)                                       $14.89         $20.83        $14.16         $19.78
     Average Kern (Spot) (per bbl)                                      $ 8.43         $14.81        $ 8.65         $14.30

International
-------------
     Net production of crude oil and natural
         gas liquids (000 BPD)
           Europe                                                          157            116           163            118
           Indonesia                                                       159            148           168            150
           Partitioned Neutral Zone                                        106             94           104             97
           Other                                                            66             67            59             64
                                                                        ------         ------        ------         ------
              Total                                                        488            425           494            429
     Net production of natural gas - available
         for sale (000 MCFPD)
           Europe                                                          255            197           261            176
           Colombia                                                        185            168           165            190
           Other                                                           108             88            87             79
                                                                        ------         ------        ------         ------
              Total                                                        548            453           513            445

     Total net production (000 BOEPD)                                      579            501           580            503

     Natural gas sales (000 MCFPD)                                         692            562           633            536

     Average International crude (per bbl)                              $11.55         $17.79        $11.05         $16.88
     Average U.K. natural gas (per mcf)                                 $ 2.53         $ 2.68        $ 2.34         $ 2.55
     Average Colombia natural gas (per mcf)                             $ 0.88         $ 1.04        $ 0.79         $ 0.95

Worldwide
---------
     Total net production (000 BOEPD)                                    1,305          1,169         1,286          1,181


</TABLE>






                                     - 15 -

<PAGE>

<TABLE>
<CAPTION>

                                                                                            (Unaudited)
                                                                         -------------------------------------------------
                                                                         For the nine months          For the three months
                                                                         ended September 30,           ended September 30,
                                                                         -------------------           -------------------
                                                                         1998           1997          1998            1997
                                                                         ----           ----          ----            ----
OPERATING DATA
--------------

Manufacturing, Marketing and Distribution
-----------------------------------------

<S>                                                                      <C>            <C>           <C>            <C>
United States
-------------
     Refinery input (000 BPD)
         Western U.S.                                                      388            415           410            420
         Eastern U.S.                                                      316            334           301            339
                                                                         -----          -----         -----          -----
              Total                                                        704            749           711            759

     Refined product sales (000 BPD)
         Western U.S.                                                      597            492           643            512
         Eastern U.S.                                                      387            323           486            327
         Other Operations                                                  228            205           216            222
                                                                         -----          -----         -----          -----
              Total                                                      1,212          1,020         1,345          1,061

International
-------------
     Refinery input (000 BPD)
         Europe                                                            356            337            326           329
         Caltex                                                            417            400            397           379
         Latin America/West Africa                                          64             59            66             60
                                                                         -----          -----         -----          -----
              Total                                                        837            796           789            768

     Refined product sales (000 BPD)
         Europe                                                            567            496           547            508
         Caltex                                                            580            564           563            545
         Latin America/West Africa                                         455            408           474            440
         Other                                                              53             62            56             66
                                                                         -----          -----         -----          -----
              Total                                                      1,655          1,530         1,640          1,559




</TABLE>

                                     - 16 -



<PAGE>


Item 6. Exhibits and Reports on Form 8-K
----------------------------------------

(a)  Exhibits

     --   (11) Computation of Earnings Per Share of Common Stock.

     --   (12) Computation of Ratio of Earnings to Fixed Charges of Texaco on 
               a Total Enterprise Basis.

     --   (20) Copy of  Texaco  Inc.'s  Annual  Report on Form 10-K for the
               fiscal year ended December 31, 1997 (including portions of Texaco
               Inc.'s  Annual  Report to  Stockholders  for the year 1997) and a
               copy of  Texaco  Inc.'s  Quarterly  Reports  on Form 10-Q for the
               quarterly  periods  ended  March 31, 1998 and June 30,  1998,  as
               previously  filed  by the  Registrant  with  the  Securities  and
               Exchange Commission, File  No. 1-27.

     --   (27) Financial Data Schedule.

(b) Reports on Form 8-K:

     During the third quarter of 1998, the Registrant  filed Current  Reports on
     Form 8-K for the following events:

     1.   July 1, 1998 (date of earliest event reported: July 1, 1998)

          Item 5. Other Events -- reported  that Texaco,  Saudi Aramco and Shell
          Oil  Company  reached  agreement  on  the  formation  and  operational
          start-up, effective July 1, 1998, of Motiva Enterprises LLC.

     2.   July 21, 1998 (date of earliest event reported: July 21, 1998)

          Item 5. Other Events -- reported that Texaco issued an Earnings  Press
          Release for the second quarter of 1998.

     3.   September 3, 1998 (date of earliest event reported: September 3, 1998)

          Item 5. Other  Events --  reported  that  Texaco and Shell Oil Company
          signed a non-binding memorandum of understanding with the intention of
          forming an alliance  for their  European oil  products  marketing  and
          manufacturing activities.


                                     - 17 -
<PAGE>

                                   SIGNATURES
                                   ----------



     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.



  
                                                          Texaco Inc.
                                                -------------------------------
                                                         (Registrant)



                                         By:              R.C. Oelkers
                                                -------------------------------
                                                (Vice President and Comptroller)




                                         By:              R.E. Koch
                                                -------------------------------
                                                     (Assistant Secretary)




Date:    November 12, 1998
         -----------------



                                     - 18 -